What is an initial coin offering (ICO)?

 What is a token?

Before proceeding to define what an ICO is, you should know the definition of Token.

The token is a new financial concept that defines a unit of value issued by a private entity; according to its definition, the token is very similar to bitcoin, as it is accepted by a community and uses a blockchain. In addition, almost all the tokens are based on the blockchain of Ethereum.

What is an ICO (Initial Coin Offering)?

In an Initial Coin Offering ( ICO ) or token sale, entrepreneurs distribute digital assets such as coins and tokens to investors in exchange for capital. Likewise, these ICOs are a new form of financing that has generated thousands of dollars on the blockchain.

Additionally, an initial coin offering is usually announced with the disclosure of a whitepaper describing the token sale, underlying computer protocol, and blockchain, as well as the project and business model. The number of tokens is usually limited, with a set funding limit.

To sum up:

The initial offerings of coins are a financing mechanism by which you collect or are obtained criptovalute; allowing the launch of a new service or a new currency. The investor delivers the cryptocurrencies and receives a token from the company in exchange.

Characteristics of an initial coin offering

The following are the characteristics of ICOs :

New companies (startups) usually raise funds by offering and promoting their products and services.

Depending on their purpose, ICOs can be similar to corporate actions, allowing third parties to participate.

They avoid the involvement of intermediaries (banks or securities dealers).

Not regulated.

They allow to form or increase the capital of a company through the acquisition of cryptocurrencies.

How an initial coin offering works

When creating a new company or starting a new project, it is important to raise funds through an ICO. For this process it is necessary:

Create a technical document that includes the description of the project and the need to be met. Similarly, you need to define the money required, the tokens to be issued, and the time or deadline.

At the start of the campaign, token buyers need to be attracted to cryptocurrencies.

If the necessary funds are acquired, they are made available to the project to achieve all objectives.

If the objectives are not met, the money ( cryptocurrencies ) can be returned. It is understood that the project has failed.

Benefits of an Initial Coin Offering (ICO)

Some benefits you will get by investing in an ICO are:

The ICO allows companies to raise funds, without the limitations of space and jurisdiction.

The investor will receive a token that can give him a lot of stability, rather than the volatility of cryptocurrency values.

They are easy to design and bring to market, with online services available.

The company thrives on the enthusiasm of investors, who expect good returns in return.

Remember that the investor should always conduct detailed ICO research before making an investment (you can search the web for launches and opportunities). We hope we have resolved your concerns regarding Initial Coin Offerings.